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Construction Loans in Burlingame
Burlingame's location between San Francisco and Silicon Valley makes it prime territory for custom home construction. Many buyers choose to tear down smaller existing homes to build estates that maximize the value of these highly sought-after lots.
Construction financing in San Mateo County requires careful planning due to the area's high land values and strict building codes. Most projects involve substantial investment, making proper loan structuring critical from day one.
The city's mature neighborhoods see ongoing renovation activity as homeowners modernize older properties. Both new builds and major remodels typically require construction financing that eventually converts to permanent mortgage funding.
Construction loan approval requires stronger qualifications than traditional mortgages. Lenders typically want credit scores of 680 or higher, with 720+ preferred for competitive rates. Down payments usually start at 20-25% of total project costs.
You'll need detailed construction plans, contractor bids, and project timelines before approval. Lenders scrutinize your builder's credentials and require licensed, insured contractors with proven track records in similar projects.
Cash reserves beyond the down payment are essential. Most lenders want 6-12 months of housing payments in reserves, plus a contingency fund of 10-20% of construction costs for unexpected issues.
Not all lenders offer construction financing, and those that do often specialize in specific project types. Some focus on high-end custom builds, while others prefer renovation projects or spec construction by experienced builders.
Community banks and credit unions sometimes offer better terms for local projects than national lenders. They understand Burlingame's market dynamics and may have established relationships with area contractors and inspectors.
Interest rates during construction typically run 1-2% higher than permanent mortgage rates. The loan disburses in stages as work progresses, with an inspector verifying completion before each draw release.
The biggest mistake borrowers make is underestimating total project costs. Include permit fees, utility connections, landscaping, and temporary housing costs in your budget. Burlingame's permitting process can add unexpected time and expense.
Timing matters significantly in Peninsula construction. Starting permits during the rainy season can delay foundation work, while summer heat affects certain finishing materials. Your lender needs realistic timelines that account for seasonal factors.
Construction-to-permanent loans eliminate the need to refinance after completion. You lock your permanent rate upfront, protecting against rate increases during the 6-12 month build period. This single-close structure saves thousands in duplicate closing costs.
Bridge loans work for quick purchases before construction starts, while construction loans fund the actual building process. Many Burlingame buyers use bridge financing to secure a tear-down property, then transition to construction lending.
Hard money loans offer faster approval with less documentation but carry significantly higher rates. They make sense for experienced builders doing spec work but rarely benefit individual homeowners building primary residences.
Jumbo conventional loans become an option after construction completes. The construction-to-permanent approach converts automatically, while standalone construction loans require full refinancing into permanent financing.
Burlingame's planning department has specific design review requirements that affect project timelines. Historic neighborhoods face additional scrutiny, and some lots have view protection ordinances that limit building heights and footprints.
Underground utility work often reveals surprises in Peninsula soil conditions. Budget for potential foundation upgrades, drainage solutions, or seismic reinforcement that may not appear in initial plans but surface during excavation.
Labor and material costs in San Mateo County run 15-25% higher than California averages. Contractor availability fluctuates with Silicon Valley's economic cycles, as many skilled trades serve both residential and commercial tech campus projects.
Expect 45-60 days from application to approval. You need finalized plans, contractor agreements, and permits in process. The complexity of your project and lender requirements determine exact timing.
Some lenders allow owner-builder arrangements with construction experience, but most require licensed general contractors. Lender risk increases significantly with inexperienced builders, often resulting in higher rates or denial.
You must cover overages with personal funds before the lender releases final draws. This is why 10-20% contingency reserves are essential. Lenders won't increase loan amounts mid-project without full requalification.
Construction-to-permanent loans can include land purchase if you don't already own the lot. You'll need higher down payments, typically 25-30% of combined land and construction costs.
You pay interest only on drawn funds during construction, not the full loan amount. Payments increase as more money disburses. Full principal and interest payments begin after conversion to permanent financing.
Mortgage financing for independent contractors and freelancers who earn 1099 income instead of traditional W-2 wages.
Mortgage programs that allow borrowers to qualify based on liquid assets rather than traditional employment income.
Non-QM loans that use 12 to 24 months of bank statements to verify income for self-employed borrowers.
Short-term financing that bridges the gap between buying a new property and selling an existing one.
Debt Service Coverage Ratio loans that qualify investors based on a rental property's income rather than personal income.
Mortgage programs designed for non-US citizens and non-permanent residents who want to purchase property in the United States.
Asset-based short-term loans primarily used by real estate investors for property acquisition and renovation projects.
Mortgages that allow borrowers to pay only the interest for an initial period, resulting in lower monthly payments upfront.
Financing solutions tailored for real estate investors purchasing rental properties, fix-and-flip projects, or investment portfolios.
Home loans for borrowers who have an Individual Taxpayer Identification Number instead of a Social Security number.
Adjustable rate mortgages held in a lender's portfolio rather than sold on the secondary market, offering more flexible terms.
Non-QM mortgages that use a CPA-prepared profit and loss statement to verify income for self-employed borrowers.
Home loans with interest rates that adjust periodically based on market conditions after an initial fixed-rate period.
Specialized mortgage programs designed to support homeownership in underserved communities with flexible qualification criteria.
Mortgages that meet the guidelines and loan limits set by Fannie Mae and Freddie Mac for secondary market purchase.
Traditional mortgage financing not backed by a government agency, offering flexible terms and competitive rates for qualified borrowers.
Innovative loan products that leverage projected home equity growth to provide favorable financing terms.
Government-insured mortgages from the Federal Housing Administration with low down payments and flexible credit requirements.
A revolving line of credit secured by your home equity that allows you to borrow funds as needed during a draw period.
A fixed-rate second mortgage that provides a lump sum of cash by borrowing against the equity built in your home.
Mortgages that exceed the conforming loan limits set by the FHFA, designed for financing high-value luxury properties.
Loans for homeowners aged 62 and older that convert home equity into cash without requiring monthly mortgage payments.
Government-backed zero down payment mortgages for eligible rural and suburban homebuyers who meet income limits.
Government-guaranteed mortgages for eligible veterans, active-duty service members, and surviving spouses with zero down payment.